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Retail REITs Post Gains in First Quarter

Retail REITs Post Gains in First Quarter

Retail REITs as a group have posted total returns of 4.51 percent through the first quarter of 2011, according to NAREIT as the sector looks to deliver strong results for the third straight year.

Retail REITs as a group trail most of the other commercial real estate sectors for the year. The overall FTSE NAREIT All Equity REIT index has posted total returns of 7.50 percent year-to-date. Of the major property types, industrial/office REITS lead the way (8.54 percent) followed by residential (6.78 percent), retail (4.51 percent) and lodging (-0.54 percent). Diversified REITs have had total returns of 7.23 percent, year-to-date.

The retail REIT total returns index stood at 627.42 at the end of February—up from 584.29 at the end of the year and 189 percent above the low of 216.82 in February 2009. It is still 29 percent shy of its all-time high of 878.58 reached in April 2007.

The retail REIT price index, meanwhile, has risen 167 percent since February 2009 from 81.14 to 216.79 and remains 40 percent below its all-time peak of 363.25 reached in February 2007. The dividend yield for retail REITs was 3.26 percent as of the end of the first quarter.

By sub-sector, regional mall REITs led the pack with total returns rising 6.30 percent through the end of the first quarter followed by shopping center REITs (2.94 percent) and freestanding retail REITs (-1.13 percent.)

Overall, NAREIT reported that U.S. REITs continued to outperform the broader equity market in the first quarter. The FTSE NAREIT All Equity REITs Index delivered a total return of 7.50 percent in the quarter and the FTSE NAREIT All REITs Index gained 6.80 percent compared to 5.92 percent for the S&P 500.

On a 12-month basis ended March 31, the total return of the FTSE NAREIT All Equity REITs Index was up 25.02 percent and the FTSE NAREIT All REITs Index was up 24.34 percent, significantly outpacing the S&P 500’s 15.65 percent gain in the period.

According to NAREIT, the equity market capitalization of the U.S. REIT industry stood at $429 billion at the end of the 2011 first quarter, up 10.28 percent from $389 billion at year-end 2010.

REITs also continued to tap public equity and debt markets in the first quarter of 2011. REITs raised a combined $23.3 billion in 59 equity and debt offerings in the period. The amount raised put the industry on track to surpass the $47.5 billion in public equity and debt it raised in 2010, the second largest annual amount raised in the industry’s history after the $49 billion raised in the record year of 2006, according to NAREIT.

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